You will have worked hard to nurture your client relationships over the years.
Through thoughtful discussions, you and your clients have settled on the strategies that will make their money work for them for the long term.
So why bring up the topic of giving away some of that wealth? After all, wouldn't that mean you have less money to manage?
The reason is that bringing charitable giving into the conversation deepens your relationship with clients, as well as increasing your overall long-term value.
Values-driven money management
For proof that more people are seeking ways to align their money with their values, look no further than the rise of impact and socially screened investments in recent years.
The Global Impact Investment Network estimates the size of the impact investment market topped $502bn this year, and shows no signs of slowing.
Women and young people in particular are keen to harness their assets in furthering the issues they care about - from climate change to cancer research.
In one wide-reaching study, 65 per cent of women said they wanted to invest in causes that matter to them. Younger people have also shown they are more likely than previous generations to seek to match their portfolio choices to their personal values.
Ethical investments are one way to do this, but an equally powerful tool in investors’ toolboxes is strategic charitable giving. In fact, research suggests a growing number of your clients are actually waiting for you to ask them about their giving.
According to a survey by Charities Aid Foundation, two-thirds of wealthy individuals said they thought wealth advisers could -and should - provide more advice related to philanthropy.
These investors are interested in your thoughts on where to give, how to give in a tax-efficient way and how they can include their children in philanthropic giving.
Advisers who discuss charitable giving with their clients say these conversations prompt clients to discuss their longer-term goals, while allowing advisers to demonstrate a genuine interest in what matters to clients.
A modern approach to philanthropy
If you think charitable giving is just about writing a cheque to the latest disaster appeal or setting aside a little something in the will for church, this way of thinking is a bit old school.
Today’s donors sit at the head of a heaving buffet of charitable giving options.
Charities around the world are working on a mind-numbing array of issues, from combating the spread of malaria in Mozambique, to training citizen advocates of LGBTQ rights in Eastern Europe.
An increasing number of charities are research and impact-driven, meaning they do more than give donors vague stories of ‘lives improved.’
Instead, the expectation in the sector is that charities are fully accountable to donors and beneficiaries, backing up their work with hard numbers and theories of change.
All this means that donors have more insight than ever before into how their gifts directly impact the causes they care about.
As a charitable giving adviser, I help donors better understand their options so they can donate to a charity or charities whose mission best aligns with their own goals. I’ve helped donors:
- Decide how best to give in honour of a parent’s passion for education
- Identify and connect with charities supporting a local hospice network
- Make a significant gift towards increasing voter turnout among women and minorities.
When it comes to structuring their giving, donors also enjoy much more flexible options than in years past.
Chief among these options are donor advised funds (DAF), also sometimes called charitable giving accounts.
These are funds usually set up through a charity or community foundation, which the donor contributes to when it’s convenient for them. The assets sit there until the donor decides which registered charities they want to gift to.
Donor advised funds are massively popular among American donors, but they are rapidly growing in popularity here in the UK, where DAF contributions reached £495m in 2016/17, having grown 33 per cent since the previous year.
Starting the conversation
In terms of broaching the topic of giving with your clients, there is a straightforward way of going about this.
Start small by identifying a handful of clients whom you already know prioritise giving or volunteering.
You could say something like: “Beverly, I know you regularly volunteer with the British Heart Foundation.
"If the issue of heart disease is especially important to you, we can talk about ways we can work meaningful gifts to that charity and others into your overall financial plan. Is that something that would interest you?”
Even if Beverly says “no,” or “not right now,” you’ve signalled to her that you understand this is an issue important to her, and that you’re the kind of adviser who takes your clients’ wider interests and passions seriously.
And that’s something that Beverly will remember.